How to Eliminate Credit Card Debt
A Rite Of Passage
Remember when you were young and so excited when you got that first credit card in the mail? Getting a credit card is almost a right of passage in today’s society, and lots of people can remember the feeling of power and exhilaration they got when they were able to score that first little piece of plastic.
A Reality Of Modern Life
In fact, having a credit card really is almost a necessity if you are going to build a good credit score and have the buying power you want when it comes time for major purchases such as a car or house. Unfortunately, however, that joy that came with that first card is probably long gone by now; in fact, you probably throw away many credit card offers that come, unsolicited, to your mailbox every month. In addition, you may be one of the millions of folks who dread paying all that interest and all those fees every month and would love nothing more than to figure out how to eliminate credit card debt – or at least reduce it quite a bit.
Options To Reduce Credit Card Debt
There are several options you can choose from when deciding how to eliminate credit card debt. You can do it yourself, hire professionals to help you, or wipe out the debt completely via bankruptcy.
Obviously, the least expensive way is to do it yourself. Here is a plan that works for a lot of people; it worked for me when I got sick of paying for my car and wanted to be rid of that car payment. This is what I did:
The Personal Plan
I sat down and took a good hard look at my income and my outgo. Then, I came up with a plan. For every unsecured debt (credit cards and a signature loan, in my case) I had, I began paying only the minimum due each month. Then, I took all the money I could find and applied it to my car payment. I paid everything, kept very little to spend, and sent the rest to the bank. Every once in a while, I didn’t even spend the entire amount I kept aside, and when that happened, I sent in an extra payment that month. It took me about a year, but by doing that, I cut off over two years of car payments.
Further Personal Progress
After seeing my success, I decided to do the same thing with my credit cards and signature loan. I then took all the money I had been paying for the car payment (that was now gone), and started applying it to one credit card. I chose the one with the smallest balance because it made me feel good to see the balance go down dramatically. It probably makes more sense to start with the one with the highest interest rate, but I found I needed the encouragement.
In four months, that card was zeroed out, and I started on the next one. I kept going until all the cards were paid off, except one, on which I kept a small balance. This method requires diligence, but the rewards are incredible.